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Tuesday, March 8, 2011

KLCI Stock - CIMB / 1023 - 2010 Quarter 4

Company Info
Market Capital (Capital Size)59,387,869,421 (Very Large)
Par ValueRM 1.00

My Analysis
Forecast P/E now(7.99-0.26)/0.5145 = 15.02 (Moderate)
Target Price8.23+0.26 = 8.49 (PE 16.0, EPS 0.5145, DPS 0.26)
DecisionNOT BUY unless price below 7.8
Revenue increased 8.9%, higher than preceding year corresponding quarter 16% and is highest all the time, eps decreased 6.6% but higher than preceding year corresponding quarter 4.4%, negative free cash flow decreasing and net cash flow increasing and turn into positive, import & export decreased on Jan, consumer price index in Jan still increasing
First Support Price8.0
Second Support Price7.8
Risk RatingLOW

Research House
Affin Target Price10 (2011-01-21)
Maybank Target Price10.3 (2011-02-07)
OSK Target Price9.77 (2011-02-18)
RHB Target Price9.8 (2011-02-21)
ECM Target Price7.95 (2011-02-28)
HwangDBS Target Price10.1 (2011-02-28)
MIDF Target Price9.6 (2011-02-28)
TA Target Price10.8 (2011-02-28)
AMMB Target Price9.7 (2011-03-02)

Accounting Ratio
Return on Equity14.49%
Dividend Yield3.26%
Profit Margin36.23%
Tax Rate23.26%
Asset Turnover0.0443
Net Asset Value Per Share3.26
Net Tangible Asset per share1.91
Price/Net Tangible Asset Per Share4.23
Cash Per Share7.74
Liquidity Current Ratio1.1157
Liquidity Quick Ratio0.9874
Liquidity Cash Ratio0.249
Gearing Debt to Equity Ratio10.4594
Gearing Debt to Asset Ratio0.9098
Working capital per thousand Ringgit sale223.4%
Days to sell the inventory1613
Days to collect the receivables4866
Days to pay the payables12295

My notes based on 2010 quarter 4 report (number in '000):-
- In 2010, Corporate & Investment Banking (“CIB”) PBT jumped 71.2% Y-o-Y at RM1.149 billion in tandem with the more robust regional capital markets and several major transactions over the past 12 months. PBT at Treasury and Investments were 17.5% lower Y-o-Y to RM1.217 billion mainly due to lower investment profits

- The Group’s Malaysian consumer bank PBT declined by 16.9% Y-o-Y. However, excluding the one-off General Provision write-back in 4Q09 ahead of FRS139 implementation, the Malaysian consumer bank’s FY10 PBT was flat

- CIMB Niaga’s contribution surged 99.7% Y-o-Y to RM1.572 billion from RM787 million previously due to operational improvements and favourable operating conditions. CIMB Thai’s PBT was flat Y-o-Y at RM47 million as provision coverage was improved. Asset Management and Insurance PBT was 38.3% lower Y-o-Y at RM87 million largely due to the non-recurrence of gains on change in accounting standards at CIMB Aviva in 2009

- CIMB Niaga was the largest contributor t0 FY10 Group PBT at 34% versus 21% i th previous corresponding period. The Malaysian Consumer Bank’s contribution to Group PBT fell to 12% compared to 18% in FY09, while Treasury and Investments declined to 26%. Contribution from CIB rebounded to 25% from 18% previously. Group Asset
Management (“GAM”) and Insurance fell to 2% from 4% while CIMB Thai’s contribution remained at 1%. Total non-Malaysian PBT contribution to the Group jumped to a new high of 48% in 2010 from 25% in 2009

- The Group’s total gross loans expanded 12.4% Y-o-Y, largely driven by the 18.0% expansion (in RM terms) of CIMB Niaga’s gross loans and the 15.3% growth in Malaysian consumer loans. Mortgages, credit cards and micro credit lending in Malaysia grew by 20.7%, 40.6% and 13.6% respectively Y-o-Y. Hire purchase loans grew by 10.6% Y-o-Y but commercial banking loans continued to decline by 1.1% Y-o-Y. Corporate loans improved by 1.8% Y-o-Y. The Group's overall net interest margins improved to 3.32% from 3.28% last year

- Total Group's deposits grew by 11.6%, underpinned by a 28.5% surge from CIMB Niaga as its deposit accumulation initiatives picked up pace. CIMB Bank's retail account balances grew 17.0% Y-o-Y as both its Malaysian and Singapore current and savings account balances grew strongly. CIMB Thai’s deposits grew by 6.0%

- The total loan impairment charge (under FRS139 policies) for the Group was RM607 million for FY10. The Group’s total credit charge was 0.36%, lower than the 0.60% full year target. The Group’s gross impaired loans ratio was 6.1% for FY10 down from 6.6% as at end-9MFY10 and 7.6% at the beginning of the year, with an impairment allowance coverage of 82.3%. The Group’s cost to income ratio rose to 55.3% compared to 52.8% in FY09

- The Group's 4Q10 revenues of RM3.169 billion were 10.2% higher versus 3Q10, but net profits were 4.1% lower on a Q-o-Q basis at RM878 million

- The Group's Malaysian Consumer Banking division PBT fell by 47.9% Q-o-Q due to higher provisions for business banking accounts, lower recoveries and higher overhead expenses. CIB surged by 62.5% on stronger deal flow but Treasury and Investments were 29.5% lower. CIMB Niaga's PBT contribution grew 12.6% Q-o-Q to RM394 million. GAM and Insurance PBT contributions declined 3.8% to RM25 million. CIMB Thai's PBT contribution (after GAAP adjustments) was a loss of RM14 million from a profit of RM35 million in 3Q10

- CIMB Niaga reported a FY10 net profit of IDR2,548 billion, a 62.5% Y-o-Y growth with a FY10 net ROE of 20.4%. The stronger performance was attributed to the strong loans and deposits growth and lower provisions. On a sequential basis, the 4Q10 net profit of IDR754 billion was 13.1% higher than 3Q10 primarily due to stronger revenue and lower provisions

- CIMB Niaga's gross loans grew 25.8% Y-o-Y in FY10 driven by strong performances from all major retail and corporate segments. Gross NPL of 2.5% as at end-December 2010 was an improvement from the 2.7% as at end-September 2010 and the 3.0% as at the corresponding period last year. CIMB Niaga loan loss coverage stood at 125.6% as at end-December 2010 compared to 108.6% as at end-December 2009

- CIMB Thai announced a FY10 net profit of THB829 million, a significant improvement from the THB2 million profit in FY09. Additional provisions lifted its loan loss coverage ratio from 62.2% at the beginning of the year to 91.3% currently. For the 12-month period, CIMB Thai chalked revenue of THB7.135 billion, a 3.6% improvement Y-o-Y

- CIMB Islamic's Y-o-Y PBT jumped 136.8% to RM404 million as Shariah-compliant banking products continue to gain ground. CIMB Islamic‟s gross financing assets grew 39.3% Y-o-Y, accounting for 14.1% of total Group loans. Total deposits grew by 29.6% Y-o-Y to RM22.7 billion

- Estimate next 4Q eps after 2010 Q4 result announced = 0.49*1.05 = 0.5145, estimate PE on current price 7.99 = 15.02(DPS 0.18)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.1267*4*0.97 = 0.4916, estimate highest/lowest PE = 18.29/15.99 (DPS 0.18)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.125*4*1.1 = 0.55, estimate highest/lowest PE = 15.42/13.78 (DPS 0.14)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.2366*4*1.1 = 1.041(10% increase quarter-by-quarter), after bonus estimate eps = 1.041/2 = 0.5205, estimate highest/lowest PE = 15.19/12.46 (DPS 0.185/2 = 0.0925)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.2268*4*1.1 = 0.9979, estimate highest/lowest PE = 14.67/12.5 (DPS 0.185)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.2058*4*1.1 = 0.9055, estimate highest/lowest PE = 14.72/13.04 (DPS 0.25)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1879*4*1.1 = 0.8268, estimate highest/lowest PE = 15.59/11.73 (DPS 0.25)

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